Market forces rained on the parade of Xencor, Inc. (NASDAQ:XNCR) shareholders today, when the analysts downgraded their forecasts for next year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Shares are up 8.3% to US$23.31 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After this downgrade, Xencor's ten analysts are now forecasting revenues of US$115m in 2025. This would be a sizeable 35% improvement in sales compared to the last 12 months. Per-share losses are expected to see a sharp uptick, reaching US$3.22. Yet before this consensus update, the analysts had been forecasting revenues of US$134m and losses of US$3.15 per share in 2025. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.

See our latest analysis for Xencor

There was no real change to the consensus price target of US$33.18, suggesting that the revisions to revenue estimates are not expected to have a long-term impact on Xencor's valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Xencor's rate of growth is expected to accelerate meaningfully, with the forecast 27% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 2.6% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 21% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Xencor to grow faster than the wider industry.

The Bottom Line

While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Xencor after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Xencor going out to 2026, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies backed by insiders.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.